Mastering SaaS Procurement: Strategies for Success

Software as a Service (SaaS) continues to streamline operations, improve efficiency, and reduce costs for enterprises globally. The steady growth in demand that it has seen in the past several years has led to an increased need for effective SaaS procurement strategies. However, there are many enterprises that continue to struggle with the complexity of managing multiple SaaS subscriptions, including their battle with compliance and optimization of their SaaS spend.

What is SaaS Procurement?

The process of acquiring and managing SaaS solutions for the procurement function of a business is SaaS procurement. The process requires spotting the right SaaS products, negotiating contracts, managing licenses and ensuring that the solutions align with the overall business goals and objectives. As a critical component, SaaS procurement requires collaboration between various departments — including IT, finance, and procurement.

In contrast with conventional procurement software — which involves purchasing perpetual licenses and installing software on machines — it’s all cloud-based solutions over the internet in the case of SaaS. Advantages of SaaS procurement include greater flexibility, scalability, and cost-effectiveness. That said, SaaS also presents unique challenges in terms of security, compliance, and vendor management.

Benefits of SaaS Procurement

Effective SaaS procurement offers several benefits to organizations, including:

Cost Savings

SaaS procurement tools help enterprises to keep the overall IT costs down. It also helps enterprises avoid unnecessary costs that are normally associated with overprovisioning or underutilization of licenses.

Increased Efficiency

Most SaaS solutions are designed to be user-friendly and quick to get up and running. This means the procurement team can streamline their workflows and get more done in less time.

Scalability

If enterprises can easily scale up or down their SaaS solutions depending on their needs, it can unlock greater flexibility and agility.

Enhanced Security and Compliance

Collaborating with reputable SaaS vendors and implementing proper security measures ensure compliance and data protection, in line with industry standards and regulations.

Better Supplier Management

A clearly defined SaaS procurement process can help manage the relationships with multiple suppliers — ensuring that the enterprise gets the best value and return on investment, without any risk whatsoever.

The SaaS Procurement Process

A clear-cut procurement process ensures that enterprises select the SaaS solution that best fits their requirements. This can enable them to derive the best value for their investment as well as mitigate the typical risks associated with cloud-based solutions. The usual steps in order in the SaaS procurement process are as follows:

Needs Assessment

Identify the business requirements and determine which SaaS solutions can best meet those needs.

Vendor Evaluation

The next step is to evaluate potential SaaS vendors based on factors such as functionality, pricing, security, and customer support.

Contract Negotiation

With the vendor finalized, the procurement team needs to negotiate the terms of the contract — such as pricing, service level agreements (SLAs) and ownership of data.

Implementation and Integration

The SaaS solution must be implemented and integrated with the existing systems and processes.

Monitoring

This ongoing step is important as it ensures that an enterprise gets value for the money it put in the software solution.

SaaS Procurement Strategies for Enterprises

Enterprises should consider the following strategies to get the best value from their SaaS procurement:

Establish a Centralized SaaS Management

Put a centralized team or function in place to manage all SaaS procurement activities — including vendor evaluation, contract negotiation, as well as license management.

Develop a SaaS Governance Framework

Create a comprehensive framework for governance with clearly defined policies, procedures and best practices.

Leverage Automation

Automation tools streamline procurement process — including vendor evaluation, contract management and license tracking.

Collaborate

Encourage collaboration between IT, finance, and procurement departments — which can help ensure that the SaaS solution is aligned with business goals and objectives.

Constant Monitoring

Continuously monitor and review the SaaS portfolio to identify opportunities for optimization, such as consolidating redundant solutions or renegotiating contracts.

Conclusion

Implementing cloud-based software requires enterprises to have a good process in place. Good procurement makes the whole process of buying and managing SaaS tools more efficient. And critically, it ensures that any software the company buys actually supports what the business is trying to achieve.

The technology landscape is evolving rapidly, and this requires enterprises to stay up to date on best practices and emerging trends in SaaS procurement — so that they can make informed decisions, minimize risks, and maximize the value of their investments.